Failure to Fill Up the 'Creditable Tax Withheld' Portion of BIR Form 1701 and 1702

Schedule 1, Page 2, Annual Income Tax Return
Failure to Fill Up the 'Creditable Tax Withheld' Portion of BIR Form 1701 and 1702
facebook.com/Kataxpayer

For the untrained minds, these two Court of Tax Appeals' resolutions contradicted each other. However, in essence, the placing of the GROSS INCOME and its corresponding TAX WITHHELD IS OPTIONAL. Provided, that the gross income which was subjected to expanded withholding tax by a supplier or vendor should be declared in the TOTAL GROSS INCOME FOR THE TAXABLE YEAR CONCERNED. Provided, further that the TAX WITHHELD THEREFROM should be indicated on the front page of 1701 or 1702. Provided, furthermore that the Certificate of Tax Withheld (BIR Form No. 2307) was attached to the said 1701 or 1702 and duly received by the BIR. Provided, finally that a note to financial statements stating among others that ALL THE GROSS INCOME SUBJECT TO WITHHOLDING OF A TAX ARE TRUTHFULLY AND CORRECTLY DECLARED.

In order to remove and completely avoid the stress and harassment being incorporated by many untrained and undereducated revenue officers, it is RECOMMENDED that you fill up the said portion. 

Visit Palaui Island that is located in Sta. Ana, Cagayan Valley to get the same picture as Katax ETM Family has.  It is better to experience the place during Amihan....


Orix Auto Leasing Corporation vs. CIR, CTA EB Case No. 1016, December 9, 2013

The fact that the “Creditable Tax Withheld” portion of the Annual Income Tax Return of the taxpayer which was left blank should not be taken lightly. It is well settled that much credence is imbued in the Annual Income Tax Return. The taxpayer asserts the truth and correctness in the declarations made therein, explicitly stating that the same are made under the penalties of perjury. Such declaration is made pursuant to the provisions of Section 267 of the NIRC.

Applying this provision to the instant case, taxpayer’s failure to fill up the “Creditable Tax Withheld” portion, coupled by the inability of the pieces of evidence submitted to prove that the income subjected to the claimed unutilized creditable withholding tax was declared as part of its gross income, is fatal to a claim for issuance of TCC on the unutilized creditable withholding tax. 
 

There is neither law nor jurisprudence that states that the taxpayer’s failure to fill up the entry in the “Creditable Tax Withheld” column in Schedule 1 of the Annual Income Tax Return would be fatal to a claim for refund.

In this claim for refund of unutilized creditable withholding taxes, the BIR questioned, among others, the taxpayer’s compliance of the requirement that the income upon which the taxes were withheld were included in the return of the recipient, on the ground that the creditable tax withheld column in schedule 1 of the annual ITR was not filled-up.

CIR vs. Sonoma Services Inc., CTA EB No. 931, December 11, 2013

The CTA en banc ruled that there is neither law nor jurisprudence that states that the taxpayer’s failure to fill up the entry in the “Creditable Tax Withheld” column in Schedule 1 of the Annual ITR would be fatal to a claim for refund. What Section 2.58.3 of RR No. 2-98 and the applicable jurisprudence require is that the taxpayer be able to declare as part of its gross income in the Annual Income Tax Return the income payment from which the withholding was made. Further, failure on the part of a taxpayer to make an entry in the “Creditable Tax Withheld” column found in page 2 of the Annual Income Tax Return, specifically Schedule 1 or the “Schedule of Sales/Revenues/Receipts/Fess” is not a sufficient basis to conclude that the taxpayer failed to comply with the requirement that “income upon which the taxes were withheld were included in the return of the recipient” when the taxpayer has offered other evidence to establish its compliance with this requirement. The claim for refund was granted. 

WHAT IN YOUR MINDS?
Let you voice in your head be heard loud and clear

Please help Katax ETM decide whether or not he will teach and discuss TAX ACCOUNTING to teachers, professors, lecturers, deans and other Filipinos engaged in teaching the future leaders of this Wow Philippines.

Please place your comment at facebook.com/Kataxpayer.